APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO. (D.C. No. 1:12-CR-00039-RBJ-1).
Elizabeth L. Harris, Law Office of Elizabeth L. Harris, LLC, Denver, Colorado, for Defendant -Appellant.
Paul Farley, Assistant United States Attorney (John F. Walsh, United States Attorney, with him on the brief), Denver, Colorado, for Plaintiff - Appellee.
Before KELLY, LUCERO, and HARTZ, Circuit Judges.
HARTZ, Circuit Judge.
Defendant Roger Howard pleaded guilty to three counts of wire fraud, see 18 U.S.C. § 1343, and one count of money laundering, see id. § 1957, arising from his participation in three mortgage-fraud schemes. His participation included identifying property buyers, arranging for their applications for mortgage loans to overstate assets and incomes, and obtaining inflated property appraisals and kickbacks to himself and some buyers. All buyers defaulted on their mortgage notes. Some notes had been sold by the original lenders to downstream lenders, who may themselves have resold the notes.
The United States District Court for the District of Colorado sentenced Defendant to 108 months' imprisonment and ordered him to pay $8,862,191.18 in restitution. He argues that the district court made two errors in imposing the sentence: (1) it improperly increased his offense level by miscomputing the loss to the mortgage lenders, see U.S.S.G. § 2B1.1; and (2) it awarded restitution to alleged victims without evidence of their actual losses.
Exercising jurisdiction under 28 U.S.C. § 1291 and 18 U.S.C. § 3742, we affirm the determination of loss under U.S.S.G. § 2B1.1, which was calculated in accordance with our precedents, but we largely agree with Defendant's restitution argument and therefore reverse the restitution order and remand for further proceedings.
I. LOSS UNDER U.S.S.G. § 2B1.1(B)(1)
Under the sentencing guideline for fraud, the offense level is based on the amount of loss. See U.S.S.G. § 2B1.1(b)(1). The district court calculated the loss caused by Defendant to be $8,961,191.18. For losses exceeding $7 million but less than $20 million, the offense level is 20. See id. § 2B1.1(b)(1)(K).
In mortgage-fraud cases like this, " [a]ctual loss" under U.S.S.G. § 2B1.1 cmt. n.3(A)(i) " is the unpaid portion of the loan as offset by the value of the collateral." United States v. Crowe, 735 F.3d 1229, 1241 (10th Cir. 2013) (internal quotation marks omitted), cert. denied, 134 S.Ct. 1565, 188 L.Ed.2d 575 (2014). " [S]o long as it is foreseeable that loans will be sold or repackaged, both the original lenders and downstream lenders are foreseeable victims of the fraud, and the general formula applies." United States v. Smith, 705 F.3d 1268, 1276 (10th Cir. 2013). " That is so because any gains or losses sustained by the original lender will be offset by a corresponding loss or gain by the downstream lender, leaving the total loss to equal mortgage balance minus foreclosure price." Id. As a result, " the number of lenders involved and the amount of profit made [or loss suffered] by the ...